Like a lot of Canadians, I took the family on a vacation this week for the March school break.

Vacations are fun, once you get to your destination. However, the airport continues to be a major source of stress, especially with eight kids in tow (no, not all mine!).

In fact, due to a giant line up at security, we nearly missed our first flight. Technically, we did miss it, but since everyone else was also caught in security, the plane was held for us and others. We arrived three hours before our flight, and spent most of it in line.

So, while I was standing in line, I cursed the terrorists and general bad guys of the world that resulted in these big lines at security. Of course, I doubt that terrorism is going to go away any time soon, so, being a ‘stock guy’ I decided to investigate a few ‘security’ companies that hope to protect the world (and profit) from increasing the world’s safety. If the bad guys are going to make me waste three hours in a line up, the least we can do is try to profit from this somehow. So, here are five companies helping to make the world a safer place:

OSI Systems (OSIS on NASDAQ)

OSI stock is up 19 per cent this year, 29 per cent over 52 weeks. Market cap is US$1.6 billion; price/earnings 21 times; no dividend. OSI makes the inspection systems at airports, as well as medical devices. It is one of two FAA approved scanning companies, so has a solid competitive edge. Earnings growth looks good, and the company has beaten earnings estimates in every one of the past eight quarters. A few years ago, some short sellers were critical of its software, but the criticism has not hurt the shares or its sales, which are up more than 50 per cent in the past two years. The next time you are asked to empty your pockets at airport security, think of OSIS. Maybe shares of OSIS can help you fill them back up, assuming shares continue to do well.

Patriot One Technologies (PAT on TSX-Venture)

PAT is up 62 per cent this year, 41 per cent in 52 weeks. Market cap is $372 million; no price earnings (losing money still); no dividend. Patriot is developing radar technologies to detect concealed weapons. It recently raised $46 million in equity and partnered with Cisco. Expectations are very high for the company, and believers see it as a good threat-detection system for large venues (concerts etc.). Certainly, unfortunately, the need is there. To date, PAT has reported no revenue, but forecasts call for $19 million in sales this year and $56 million next year.

ShotSpotter Inc. (SSTI on NASDAQ)

ShotSpotter is up 33 per cent this year, 86 per cent over 52 weeks. Market cap is US$462 million; price/earnings ratio is 233; no dividend. The company offers gunfire alerts and detectors, location alerts, location analysis and protection services. Essentially, when there is a bad guy, SSTI technologies help responders find the threat faster. The company has no debt and about US$10-million cash prior to a recent US$11-million raise. Sales were US$35 million last year and forecast to rise to US$62 million in 2020. Some investors are skeptical: the short position on the stock is 1.4 million shares, or 24 per cent of the float.

Axon Enterprise Inc. (AAXN on NASDAQ)

AAXN is up nine per cent this year, 22 per cent over 52 weeks. Market cap $2.8 billion; trading at 53 times earnings; no dividend. You likely know Axon from its prior name, Taser. Yes, the company whose products are used worldwide by police and security forces. It claims it has saved 212,000 lives with its devices. Growth has been solid and is expected to remain so, and the company is debt free with US$350 million in cash right now. It is adding to its product line and hopes to be an all-around security company.

Booz Allen Hamilton Holdings (BAH on NYSE)

BAH is up 24 per cent this year, 46 per cent over 52 weeks. Market cap is US$7.8 billion; price/earnings 20 times; dividend 1.6 per cent. It doesn’t get a lot of attention, partly because most of its employees have high security clearances, and the company really can’t discuss its business that much. It provides consulting services to the U.S. government in the defence, intelligence and civil markets. For example, one of its businesses is scanning emails with artificial intelligence to look for clues for possible terrorist cell activity. The company has shown pretty consistent earnings growth for the past 10 years. Per share earnings look to double from 2015 to 2020 forecasts.

It is very sad, but telling, that every single one of these security stocks is up big this year. Perhaps a sign of the times. But for investors, if one can feel good about helping to protect the world and make money by doing so, then why not?

Peter Hodson, CFA, is Founder and Head of Research of 5i Research Inc., an independent research network providing conflict-free advice to individual investors (http://www.5iresearch.ca).

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